Collecting and Remitting Taxes through your On-Demand App

If monies earned from the provision of services within your on-demand marketplace are considered a taxable supply under the Excise Tax Act and respective provincial tax regimes of British Columbia, Manitoba, Saskatchewan and Quebec, you need to take steps protect your sellers and yourself from potential tax liability by permitting them to collect excise taxes within your platform or advising them how to collect those taxes outside of it. Make sure you seek related legal advice and if necessary insert the appropriate language into your end user licence agreements.

When it comes to HST/GST, if a sellers income exceeds $30,000 your sellers have to register, collect and remit the applicable tax. When it comes to PST, things vary from province to province. Here is some information from provinces where PST applies to service providers apart from GST:

British Columbia

Businesses Required to Register – i.e. if they do the following in the ordinary course:

Provide taxable services exceeding $10k a year

Unless they are a Small Seller:

Located in BC, but no business premises and do not regularly make retail sales from established commercial premises

Less than $10k gross revenue last 12 months & estimated less than $10k next 12 months

Taxable Goods

All goods purchased or leased which are brought, sent or delivered to BC for use in BC

Saskatchewan

Businesses Required to Register for PST if they carry on business in Saskatchewan and do any of the following in ordinary course:

Carry on business in Saskatchewan selling taxable goods/services at retail

Provides taxable services

Business is not required to register for PST if:

Annual sales are less than $10,000;

The goods are produced and sold from their residence; and,

PST is paid or self-assessed on the purchase price of equipment and supplies used in the production of those goods.

Taxable Services

Computer services

Credit reporting or collection services

Dry cleaning or laundry services

Extended warranties or maintenance contracts

Most non-mainstream lodging for one month or more

Lodging in motels, hotel, hostels, apartment houses, lodging houses

Security or private investigation services

Telephone answering services

Veterinary services

accounting services; advertising services; architectural services

commercial building cleaning services;

employment placement services;

engineering services

legal services

Most construction services

Telecommunications services

Quebec

Businesses must Register for QST if they carry on commercial activities in Quebec:

Generally, a service is considered performed in Québec if, in the ordinary course of the supplier’s business, the supplier obtains an address of the purchaser that is in Québec.

Taxi or limousine services must always register

The supplier is not a Quebec resident, but charge for activities or events in Quebec

Business is not required to register for QST if:

Supplier is a small supplier whose total taxable supplies (including zero-rated supplies) made worldwide by the supplier – and associates – in the course of a given calendar quarter or in the four preceding calendar quarters does not exceed $30,000

Taxable Goods & Services

Generally all goods and services are taxable except those specifically exempted. Some examples include:

tools sold to a business specialized in the repair of small motors, as well as lawnmowers sold by the business

molds sold to a bakery, as well as chocolates sold by the bakery

computers sold to a law firm, as well as legal services provided by the firm

sales of new residential complexes

sales and rentals of commercial buildings

retail automobile sales and automobile rentals

sales of gasoline and automobile repair services

sales of soft drinks, candy and potato chips

sales of clothing and footwear

the rental of hotel accommodations for a night

the provision of barber and hairstylist services

sales of printed books that have an International Standard Book Number (ISBN), in the GST system only

Exempt Services

the provision of most health, education, childcare and legal-aid services

the provision of certain services by public sector bodies – e.g. government and public service

the provision of most financial services.

Find out more about excise taxes in Canada

We advise On-Demand entrepreneurs to pay the websites of the Canada Revenue Agency and, also in the four provincial regimes where their platform delivers services in those provinces to ensure they’re in compliance. A person prepared for the coming of the taxman is a happy, protected person who won’t be dinged when filing time arrives. If you are still in doubt, consult a good accountant!

Finally, if your service providers have been a little lax in collecting and remitting tax, it’s not necessarily the end of the world. The CRA’s Voluntary Disclosure Program eliminates penalties (often onerous), but taxes and interest will still apply.

Forewarned is forearmed. Make sure your ducks are in a row when the taxman cometh.